-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DyRuH5NR4Q9AkrjeSfV9j2MdMBOL7q7fWZhLD2GM/lLlkA694E3M0PE+4K2GMPwr 9+mABEDPpF6qk839WLcD5w== 0000313927-96-000011.txt : 19960812 0000313927-96-000011.hdr.sgml : 19960812 ACCESSION NUMBER: 0000313927-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960809 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHURCH & DWIGHT CO INC /DE/ CENTRAL INDEX KEY: 0000313927 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 134996950 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10585 FILM NUMBER: 96606605 BUSINESS ADDRESS: STREET 1: 469 N HARRISON ST CITY: PRINCETON STATE: NJ ZIP: 08543-5297 BUSINESS PHONE: 6096835900 MAIL ADDRESS: STREET 1: 469 N HARRISON STREET CITY: PRINCETON STATE: NJ ZIP: 08543-5297 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarter ended June 28, 1996 Commission file No. 1-10585 CHURCH & DWIGHT CO., INC. (Exact name of registrant as specified in its charter) Delaware 13-4996950 (State of incorporation) (I.R.S. Employer Identification No.) 469 North Harrison Street, Princeton, N.J. 08543-5297 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code:(609) 683-5900 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of July 26, 1996, there were 19,576,723 shares of Common Stock outstanding. 1 of 9 PART I - FINANCIAL INFORMATION CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited)
Three Months Ended Six Months Ended (In thousands, except per share data) June 28, June 30, June 28, June 30 1996 1995 1996 1995 Net Sales $134,627 $128,980 $256,175 $246,943 Cost of sales 76,896 75,253 146,682 143,946 Gross profit 57,731 53,727 109,493 102,997 Selling, general and administrative expenses 49,247 47,002 96,279 96,522 Income from Operations 8,484 6,725 13,214 6,475 Equity in joint venture income 1,310 2,253 2,582 4,682 Investment income 326 267 638 531 Gain on disposal of product lines - 103 - 205 Other income/(expense) (304) 46 (317) 77 Interest expense (108) (387) (243) (825) Income before taxes 9,708 9,007 15,874 11,145 Income taxes 3,577 3,365 5,895 4,360 Net Income 6,131 5,642 9,979 6,785 Retained earnings at beginning of period 171,138 166,896 169,438 167,901 177,269 172,538 179,417 174,686 Dividends paid 2,149 2,153 4,297 4,301 Retained earnings at end of period $175,120 $170,385 $175,120 $170,385 Weighted average shares outstanding 19,540 19,559 19,533 19,546 Earnings Per Share: Net income per share $.31 $.29 $.51 $.35
2 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 28, December 31, 1996 1995 (Dollars in thousands) (Unaudited) Assets Current Assets Cash and cash equivalents $ 9,795 $11,355 Short-term investments 5,048 5,027 Accounts receivable 51,329 44,427 Inventories (Note 2) 46,857 41,349 Deferred income taxes 12,402 11,704 Prepaid expenses 4,903 5,313 Total Current Assets 130,334 119,175 Property, Plant and Equipment (Note 3) 140,245 144,339 Note Receivable from Joint Venture 11,000 11,000 Equity Investment in Joint Venture 10,955 11,258 Long-Term Supply Contract 3,583 3,852 Goodwill 3,556 3,556 Total Assets $299,673 $293,180 Liabilities and Stockholders' Equity Current Liabilities Short-term borrowings $ - $ 5,000 Accounts payable and accrued expenses 89,486 86,815 Income taxes payable 5,974 5,286 Total Current Liabilities 95,460 97,101 Long-Term Debt 7,500 7,500 Deferred Income Taxes 20,032 19,573 Deferred Liabilities 2,202 1,595 Nonpension Postretirement and Postemployment Benefits 14,025 13,729 Stockholders' Equity Preferred Stock - $1 par value Authorized 2,500,000 shares, none issued - - Common Stock - $1 par value Authorized 100,000,000 shares, issued 23,330,494 shares 23,330 23,330 Additional paid-in capital 33,203 33,061 Retained earnings 175,120 169,438 Cumulative translation adjustments (673) (686) 230,980 225,143 Less common stock in treasury, at cost - 3,758,771 shares in 1996 and 3,805,071 shares in 1995 69,977 70,501 Due from officers (549) (960) Total Stockholders' Equity 160,454 153,682 Total Liabilities and Stockholders' Equity $299,673 $293,180
3 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Six Months Ended June 28, June 30, (Dollars in thousands) 1996 1995 Cash Flow From Operating Activities Net Income $ 9,979 $ 6,785 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 6,864 6,434 Deferred income taxes (239) 921 Equity in joint venture income (2,582) (4,682) Gain on asset disposals - (205) Other 23 13 Change in assets and liabilities: (Increase)/decrease in short-term investments (22) 976 (Increase) in accounts receivable (6,901) (7,286) (Increase)/decrease in inventories (5,506) 3,604 Decrease/(Increase) in prepaid expenses 409 (543) Increase in accounts payable 2,671 4,196 Increase in income taxes payable 684 1,893 Increase in other liabilities 904 889 Net Cash Provided By Operating Activities 6,284 12,995 Cash Flow From Investing Activities Additions to property, plant and equipment (2,510) (11,614) Repayment of officer loans 412 - Distributions from joint venture 2,885 4,587 Net Cash Provided By (Used In) Investing Activities 787 (7,027) Cash Flow From Financing Activities Short-term debt repayments (5,000) (176) Payment of cash dividends (4,297) (4,301) Proceeds from stock options exercised 711 564 Purchase of treasury stock (45) (31) Net Cash Used In Financing Activities (8,631) (3,944) Net Change In Cash and Cash Equivalents (1,560) 2,024 Cash And Cash Equivalents At Beginning Of Year 11,355 4,659 Cash And Cash Equivalents At End Of Period $ 9,795 $ 6,683
4 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated balance sheet as of June 28, 1996, the consolidated statements of income and retained earnings for the six months ended June 28, 1996 and June 30, 1995, and the consolidated statements of cash flow for the six months then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flow at June 28, 1996 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1995 annual report to shareholders. The results of operations for the period ended June 28, 1996 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: June 28, Dec. 31, (in thousands) 1996 1995 Raw materials and supplies $12,484 $11,066 Work in process 118 134 Finished goods 34,255 30,149 $46,857 $41,349
3. Property, Plant and Equipment consist of the following: June 28, Dec. 31, (in thousands) 1996 1995 Land $ 3,188 $ 3,188 Buildings and improvements 63,995 63,949 Machinery and equipment 152,739 151,965 Office equipment and other assets 14,796 14,633 Mineral rights 5,020 5,020 Construction in progress 2,665 1,145 242,403 239,900 Less accumulated depreciation and amortization 102,158 95,561 Net Property, Plant and Equipment $140,245 $144,339
5 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. Equity Investment in Joint Venture The following table reflects summarized financial information for the Armand Products Company joint venture. The Company accounts for its 50 percent interest in the joint venture under the equity method. Product and services are provided to the Armand Products Company by the joint venture partners at cost. As a result, the following information would not be indicative of the financial position or results of operation had the joint venture operated on a stand-alone basis.
Three Months Ended Six Months Ended June 28, June 30, June 28, June 30, (in thousands) 1996 1995 1996 1995 Net sales $10,148 $13,456 $20,084 $26,754 Gross profit 3,242 5,114 6,420 10,561 Net income 2,392 4,278 4,710 8,910 Company's share in net income 1,196 2,139 2,355 4,455 Elimination of Company's share of intercompany interest expense 114 114 227 227 Equity in joint venture income $1,310 $2,253 $2,582 $4,682
5. Restructuring Charge In 1993 and 1994 the Company recorded restructuring charges in connection with a cost reduction program and the write-off of assets related to discontinued products and plant consolidations. Components of the outstanding reserve balances included in accounts payable and accrued expenses consist of the following:
Reserves at Disposals/ Reserves at (in thousands) December 31, 1995 Payments June 28, 1996 Fixed asset removal and demolition $ 587 $ 24 $ 563 Severance and related 1,765 1,235 530 Other 1,204 57 1,147 $3,556 $1,316 $2,240
6. Net income per share is computed based upon the weighted average number of common shares outstanding during the period. Common equivalent shares have been excluded because their effect was not material. 6 of 9 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the quarter ended June 28, 1996, net income was $6.1 million or $.31 per share. This compares with $5.6 million or $.29 per share for the same period of 1995. For the first six months of 1996, net income was $10.0 million or $.51 per share compared with $6.8 million or $.35 per share for 1995. Net sales in the quarter were $134.6 million, representing an increase of $5.6 million or 4.4% versus a year ago. This increase was due to substantially higher Arm & Hammerr Laundry Detergent sales, as well as slightly higher U.S. Personal Care and Specialty Products sales. These gains were partially offset by lower sales of Arm & Hammer Carpet Deodorizer, and lower Consumer sales in Canada and the U.K. Net sales for the first six months of 1996 were $256.2 million, a $9.2 million or 3.7% increase over the first six months of 1995. The increase is primarily a result of the relaunch of ARM & HAMMER Liquid Laundry Detergent and higher unit volume of the ARM & HAMMER Deodorant Anti-Perspirant line. These increases were partially offset by lower unit volume of ARM & HAMMER Powder Laundry Detergent and ARM & HAMMER Carpet Deodorizer. Specialty Products sales increased as well, led by higher sales of performance and agricultural grades of sodium bicarbonate, higher sales of MEGALAC Rumen Bypass Fat, and the continued strong performance of the Company's Brotherton Speciality Products Ltd. subsidiary in the U.K. The Company's gross margin for the second quarter was 42.9 % and 42.7% for the six month period. This compares with 41.7% for both the second quarter and six month period of 1995. The gross margin improvement is a result of higher effective selling prices and lower distribution costs, partially offset by a weaker product mix. Selling, general and administrative expenses increased $2.2 million in the current quarter as compared to last year but are slightly lower for the six month period. Selling expenses increased in the quarter and for the six month period primarily as a result of increased promotional support for the relaunch of ARM & HAMMER Liquid Laundry Detergent. This increase was partially offset by lower advertising and promotional costs for personal care products. General and administrative expenses were lower because of various cost reduction programs undertaken by the Company over the last 12 months. The Company's Armand Products Company joint venture saw sales decline approximately 25% for both the second quarter and six month periods, resulting in a $.9 million decrease in equity income in the quarter and a $2.1 million decrease for the six month period. This is due to new competition coming into the marketplace, which has been anticipated for some time. Interest payments were significantly lower for both the second quarter and six month period as a result of the repayment of short-term debt while investment income increased slightly. Other expenses increased due to foreign exchange losses relating to the devaluation of the Venezuela bolivar, which occurred in the second quarter of 1996. The effective tax rate for the first half of 1996 was 37.1% as compared to 39.1% in the first half of 1995. This decrease is due to the impact of a reduction of foreign operating losses in 1996 for which the benefits were not recognizable in 1995. Liquidity and Capital Resources The Company considers cash and short-term investments as the principal measurement of its liquidity. At June 28, 1996, cash, including cash equivalents and short-term investments totaled $14.8 million compared to $16.4 million at December 31, 1995. During the first half of 1996, the Company generated $6.3 million of positive cash flow from operating activities and received $2.9 million in distributions from its Armand Products joint venture. Significant expenditures included additions to property, plant and equipment of $2.5 million, the repayment of its outstanding short-term debt of $5.0 million and the payment of cash dividends of $4.3 million. 7 of 9 PART II - Other Information Item 4. Results of Vote of Security Holders The Company's Annual Meeting of Stockholders was held on May 9, 1996. The following nominees were elected to the Company's Board of Directors for a term of three years. Nominee For Withhold Cyril C. Baldwin, Jr. 34,190,467 467,876 William R. Becklean 34,186,659 471,684 Rosina B. Dixon, M.D. 34,181,162 477,181 Dean P. Phypers 34,144,286 514,057 The results of voting on the following additional items were as follows: Proposal to approve the Church & Dwight Co., Inc. Compensation Plan for Directors. For Against Abstained Broker Non-Votes 32,587,015 1,576,182 495,146 0 Approval of the appointment of Deloitte & Touche as independent auditors of the Company's 1996 financial statements. For Against Abstained Broker Non-Votes 34,304,869 264,894 88,580 0 To consider and act upon a stockholder proposal requesting that the Board of Directors take the steps necessary to provide for the election of Directors annually and not by class. For Against Abstained Broker Non-Votes 3,745,805 27,118,991 841,480 2,952,067 To consider and act upon a stockholder proposal requesting that the Board of Directors commit to a program to diversify the members of the Board of Directors. For Against Abstained Broker Non-Votes 2,982,563 28,077,309 646,404 2,952,067 Item 6. Exhibits and Reports of Form 8-K (a) No reports on Form 8-K were filed for the three months ended June 28, 1996. 8 of 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHURCH & DWIGHT CO.,INC. (REGISTRANT) DATE: August 6, 1996 Zvi Eiref ZVI EIREF VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER DATE: August 6, 1996 Gary P. Halker GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 9 of 9 EX-27 2
5 1000 6-MOS DEC-31-1996 JAN-01-1996 JUN-28-1996 9,795 5,048 52,668 1,339 46,857 130,334 242,403 102,158 299,673 95,460 7,500 0 0 23,330 137,124 299,673 256,175 256,175 146,682 146,682 0 100 243 15,874 5,895 9,979 0 0 0 9,979 .51 .51
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